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Fast Comment NorwayRevised budget a non-event for financial markets; neutral to Norges Bank

  1. Neutral fiscal stance; fiscal impulse still calculated at 0.1 p.p
  2. Norges Bank has already taken this into account
  3. The big news today was the GDP numbers; supported the case for a rate hike in September
Neutral fiscal stance
The newly-released revised budget for 2018 showed only small changes from the 2018 fiscal budget of October 12, 2017. Basically, the government stuck to the neutral fiscal stance which it adopted last autumn. According to the revised figures, the use of petroleum revenues is now estimated at NOK 225.5bn in 2018, which represents 2.7 percent of the capital of the Government Pension Fund Global (GPFG). This is slightly down from the corresponding figures of NOK 231.1/2.9 percent in the autumn budget. However, the changes are too small to alter the fiscal impulse, which is still calculated at 0.1 percentage points. This is as close to neutral as you can get, and Norges Bank has already taken it into account. A quick look at the forecasts also reveals that the general outlook for mainland GDP, wages and inflation are close to Norges Bank’s own forecasts. Hence, the revised budget is neutral to the outlook for the key policy rate. The most important news today was that mainland GDP growth is holding up well, supporting the case for a rate hike in September. That is already covered in a separate Fast Comment.

Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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